Touting cheaper labour and relaxed customs, India makes big push to be a global electronics repair hub
[NEW DELHI] The Indian government’s new pilot project to position the country as an electronics repair hub has the potential to generate revenue of up to US$20 billion and create five million jobs over the next five years, authorities said.
The Ministry of Information and Technology on May 31 launched the project to test electronics repair resourcing and to lure local and foreign tech manufacturers. The pilot will take place in Bengaluru – the capital of India’s southern Karnataka state – with participating companies such as China’s Lenovo and Singapore-based Flex.
The global electronics repair outsourcing sector is estimated to be worth as much as US$100 billion, with China and Malaysia being the two most dominant players in this space.
“The pilot project will give us a chance to iron out teething issues before a full-fledged policy can be framed,” said Ali Akhtar Jafri, director-general of the Manufacturers Association of Information Technology (Mait).
In recent years, India has rolled out the red carpet for global firms such as Apple, Samsung and Xiaomi to manufacture in the country, and industry players say that the next logistical step would be to move into repairs.
Mait, an industry group for India’s IT and electronics manufacturers, has been urging the government to launch such a pilot project, with the hope that it can be expanded nationwide if successful.
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Under the pilot, authorities test changes to lower the time needed for the necessary approvals for exports and imports to just one day, from as long as 10 days currently.
This will allow the devices to be repaired more quickly and shipped back, whether to the original country or even to a different destination, something which is not allowed under current foreign trade rules.
The pilot comes on the heels of Prime Minister Narendra Modi’s Mission Life initiative, a flagship programme launched by the government in October 2022 to encourage individual and collective action on climate.
Jafri noted that the high costs of repairing electronic goods in places such as the United States and Europe have compelled companies there to send their goods overseas where the services are cheaper, and this presents an “excellent opportunity” for India to raise its game.
According to data by Mait, India’s cheaper labour costs give the country a cost advantage of 57 per cent over China and 26 per cent over Malaysia. Indonesia and Hungary are among the other major hubs for repairs.
As part of the pilot, the government will allow the filing of bills of entry or shipping bills in advance. The customs department has set up a dedicated team to look after custom clearances in line with the policy changes during the three-month trial.
Firms that provide repair services say they are looking forward to the growth opportunities presented by the pilot, and hope that it will be extended or made permanent.
“Companies that have supply chain experience for sourcing components will have a great opportunity. From an investment perspective, they will be looking to expand their capacity,” said Deepak Bhatt, the co-founder of Soldrit, a mobile phone and laptop repair service centre based in Bengaluru.
“(The jobs) will come if things go as planned. A lot depends on the implementation, as quick custom clearance and zero-custom duties are key to make this pilot a success,” he added.
The Indian government is aware of some of the risks posed by a greater push to become an electronics repair hub, such as being a dumping ground for e-waste should some products be unable to be repaired.
Under the current laws, companies cannot dispose of these useless products locally as they must send these items back to the source country. As part of the pilot, the government will allow recycling of 5 per cent of the imported goods.
“This could mean more business for dismantlers as well. Ideally, the recycling industry and the repairs sector will work hand in hand,” said Bhatt.
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